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The detailed plans – outlined in the consultation on regulatory changes to the sector – follow general proposals put forward in the White Paper to lower the current requirement for colleges to have more than 4,000 students.

In the Technical Consultation, published yesterday by the Department for Business, Innovation and Skills, the government proposes that institutions with taught degree awarding powers should be allowed to apply for university title if they meet the lower threshold of 1,000, including at least 750 students are studying for a degree.

It also suggests that such an institution should have more than 50 per cent of its overall student body studying on degree-level courses or above.

Andy Westwood, chief executive of GuildHE, which counts several small specialist colleges among its members, said the body “wholeheartedly” welcomed the change.

“A number of GuildHE members fit into this category and although they already have degree awarding powers and histories stretching back over hundreds of years, they have not been able to call themselves universities.

“This has long been out of step with other universities in the UK and internationally and has been unduly confusing to students and employers alike,” he said.

Peter Lutzeier, principal of Newman University College, Birmingham, said the move was particularly welcome as government caps on student numbers made it “almost impossible” for many small institutions to achieve the current 4,000 threshold.

“By significantly reducing the arbitrary numerical barrier to achieving full university status, the proposals outlined in the consultation document represent a welcome, cost-neutral opportunity to clarify the nature of all English higher education institutions and enable graduates and staff to obtain proper recognition for the quality of their work.”

Anne Carlisle, rector of University College Falmouth, said: “High quality, well respected small and specialist higher education institutions deserve to be recognised as full universities. University title will allow us to build a world class multi arts university in Cornwall.”